South Africa’s Fourth Estate “is on its knees” as Google and Meta’s dominance has captured 97% of all digital advertising in the country, creating an “extinction crisis” for the media.
This is the view of Ishmet Davidson, the chief executive officer of Media24, South Africa’s largest digital news publisher, which is owned by internet firm Naspers. He was testifying at the country’s Competition Commission inquiry into Google’s dominance in search and digital advertising.
Davidson has “played an active role in resisting any potential threat by government to interfere in or to curtail press freedom” in his 30-year career in publishing. But the biggest “threat to press freedom in our country is not from government, it’s from one of the wealthiest and most dominant companies in the world, Google.”
The Fourth Estate plays “a vital role in our democracy” which is “enshrined in our constitution,” he told the Media And Digital Platform Marketing Inquiry. “Yet today we find ourselves not just facing challenges relating to freedom of the press but challenges relating to the very existence of the press.”
The South African digital advertising revenue market grew from R3.5-billion in 2015 to R14.5-billion in 2022, Davidson said. But based on the latest statistics from the country’s IAB advertising body, with PwC, Google and Meta are “absolutely dominant with 97% market share, leaving publishers with the crumbs.”
“What’s particularly concerning is that in 2015, publishers had an 8% market share, which by 2022 had declined to 3%. On the other hand, during this time, Google’s dominance grew from 67% to 78% of the digital advertising market (with close to 100% of the search market).”
He added: “Even more shocking is Google’s advertising revenue growing to over R11-billion, at an average annual growth rate of 25%.”
In effect, Google’s dominance in digital advertising has done what South Africa’s apartheid government was never able to do and shut down critical voices, while weakening democracy. The National Party, which introduced Apartheid, spent decades trying to silence the mostly English-language newspapers, including independent media outlets like The Weekly Mail and Vrye Weekblad. It was voted out of power in South Africa’s first democratic election in 1994, which saw Nelson Mandela elected as president.
Moneyweb editor Ryk van Niekerk told the hearing that the mainstream media has played a “critical role during the past decade in exposing state capture” and has “contributed significantly to protecting our constitutional democracy”.
State capture is the phrase used to describe government corruption under the current ruling ANC party, which has crippled the provision of electricity (with as much as 12 hours a day without power due to rolling blackouts), as well as infrastructure and logistics. As much as $34 billion (ZAR500 billion) was looted during the “nine wasted years” of former South African president Jacob Zuma, said his successor, President Cyril Ramaphosa.
‘Fundamentally misunderstand’
Google and Meta have made written submissions and will testify later this month. X, formerly known as Twitter and owned by South African-born Elon Musk, has refused to participate.
Google claims in its written submission that it does not make much revenue from news. “While we appreciate that both publishers and search engines have an ads-funded business model, there is no competitive interaction between Google Search and a news publisher in relation to searches with news intent,” said the Google submission.
Meta’s submission claimed the competition investigation “fundamentally misunderstand the relationship between publishers and the Meta platforms, and materially exaggerate the degree to which publishers’ content drives users to access Feeds and, by corollary, advertising content on Meta’s platforms.”
Referring to its global Google News initiative, the search giant said it gave publications funding and training.
But Davidson said this $300-million it has given to the world’s media in the past six years represents just 0,03% of its global advertising, totalling $1,07-trillion, according to figures from the Securities and Exchange Commission and Google for the years 2018 to 2023.
This “is just altruism disguising greed” much “like tossing crumbs to appease the peasants,” he told the commission, adding it “is designed to increase their stranglehold over the media industry”.
“We don’t want their charity. What we do want is to be fairly compensated for our content.”
‘40% of Google Search from news’
A Swiss media study last year found that Google makes as much as 40% of its revenue from media content, or “$176-million per year in Switzerland alone,” while news content “accounts for the majority of Google’s $280-billion annual revenue,” wrote Courtney Radsch, the director of the Centre for Journalism & Liberty and a fellow at the UCLA Institute for Technology, Law & Policy.
The study, conducted by FehrAdvice & Partners, concluded that Google searches using media content bring in an estimated revenue of around $440-million a year.
US publishers are owed between $11-billion and $14-billion a year by Google and Meta, according to research published last year by academics from Columbia University and the University of Houston.
Davidson’s views were echoed by Van Niekerk, who is also Moneyweb’s commercial manager. He said his digital publication “is trapped in Google’s ecosystem” with 43% of its traffic directed to it by the search giant.
Publishers are also at the mercy of Google’s own agendas. “Unfortunately, Google changes the algorithm often without informing publishers, which, in Moneyweb’s case, has led to a sudden drop in traffic. It is a big problem for us,” he told the hearing. “If Moneyweb is not part of this [Google] ecosystem, we will close our doors.”
Google reaps the rewards
Google reaps the major economic rewards from the work the media does. “Moneyweb invests heavily in editorial content, and it seems that Google and other digital platforms benefit financially from the content,” Van Niekerk said.
“Journalism is in danger,” Caxton chairman Paul Jenkins told me. “Digital advertising follows eyeballs and does not discriminate between clickbait, fake news and cutting-edge journalism.” Moneyweb is part of the Caxton stable.
Despite generating 2.36-billion search page impressions in 2023, News24, part of Media24 which is South Africa’s largest digital news publisher, received only 4% of click-throughs. The balance was “monetized by Google,” CEO Davidson told the hearing.
News24’s total number of Google impressions – from its search, News and Discover offerings – totalled 5,2 billion, with a 5% click-through rate. Some 5 billion – or 95% – of the impressions were “for Google’s benefit.”
But, said Davidson, that 5% clickthrough, represents 44% of News24’s referral traffic.
“So, without Google, we’d lose almost half of our referral traffic and would be in even deeper trouble.”
“As Google likes to pretend, news may well be ‘insignificant’ in the global Google universe, but it’s hardly insignificant when we take the contribution in impressions.”
Sbu Ngalwa, the chairperson of the South African National Editors’ Forum, told the hearing the day before that “the entire industry is in trouble.”
“Fair compensation to us should be based on the value that the platforms derive from the content. The reality is that we don’t know what that value is because the tech companies do not provide that information,” he said.
Khadija Patel, from the International Fund for Public Interest Media, and a former editor of South Africa’s Mail & Guardian newspaper, warned that “what we are mourning is not the death of newspapers. What instead we are really afraid of is a future without access to news at a low price point. When I say news, I mean high-quality independent news. That’s what newspapers ultimately represented.”
Adriaan Basson, News24’s editor-in-chief, summed up the dilemma for the media industry, which actually creates the content, in that Google, “without a newsroom” and without generating its own content, makes the most money from that content.
This article first appeared on Forbes, where Toby Shapshak is a senior contributor.